The FSA has banned and fined former JC Flowers UK chief executive Ravi Shankar Sinha £2.9m for fraudulently obtaining £1.4m through a fictitious invoicing scheme.
The fine is made up of reclaiming the £1.4m Sinha made in profits from the scheme, plus a £1.5m punitive element.
Sinha was chief executive at JC Flowers UK between May 2005 and November 2009. In his role he acted as an investment adviser to certain private equity funds through a US based private equity firm.
His financial position deteriorated from 2007 as a result of the financial crisis. Sinha borrowed heavily to finance those investments as their performance dived and left him unable to service his debts.
Between February and October 2009 Sinha issued invoices to a company, in which the JCF funds had invested, for fees payable to himself to which he was not entitled.
In order to secure payment of the invoices, Sinha deliberately misled the company’s chief executive by claiming the payments had been authorised and approved by JC Flowers UK, when no such authorisation or approval had been sought or given.
Sinha also dishonestly hid the payments he was receiving from JC Flowers UK.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Sinha exploited his position of trust as chief executive to fraudulently obtain significant sums for his personal benefit. He engaged in a dishonest, deliberate and sustained course of misconduct which lasted for several months. Such behaviour has no place in the financial services industry.
“Sinha becomes the latest in a long line of dishonest individuals who have found themselves facing substantial fines and being banned from working in financial services. Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle such behaviour – wherever we find it.”
JC Flowers said it planned to build a “supermutual” after it took a 40 per cent stake in Kent Reliance in July 2010 alongside a £50m investment to be used as a platform for acquiring further building societies. It is thought the private equity firm, which employs former FSA chairman Sir Callum McCarthy as its chairman of European operations, is also looking to buy UK mortgage books after it lost out to Virgin Money in the £1bn auction for Northern Rock.